Federal Reserve Member Supports Gradual Rate Cuts, Emphasizes No Rush

Washington – U.S. Monetary Policy

Christopher Waller, a member of the U.S. Federal Reserve Board, confirmed his support for continuing interest rate cuts aimed at returning monetary policy to a neutral level. He stressed that the central bank is not compelled to rush into additional decisions at this time.

During his participation in a forum organized by CNBC, Waller explained that monetary policy remains about 100 basis points above the neutral level, which neither constrains economic growth nor stimulates inflationary pressures, indicating that this gap gives the Fed room to move calmly.

Gradual Path to Neutrality

Waller stated that a continued slowdown in inflation through 2026 would allow for a measured pace of interest rate cuts, without risking market stability, adding that reductions could occur gradually until monetary policy returns to its normal state.

Background on Recent Decision

These are Waller's first remarks since the Federal Reserve decided to cut interest rates for the third consecutive time last week, a decision that saw three dissenting votes within the committee for the first time since 2019, reflecting a clear divergence of views among policymakers.

The Fed also slightly adjusted the wording of its last statement, indicating an increase in uncertainty regarding the timing of future steps, which heightened market caution in pricing the future path of interest rates.

Central Bank Independence

Regarding news about a potential nomination for the Federal Reserve chairmanship, Waller stated he is scheduled to meet with President Donald Trump later, while reaffirming his full commitment to the independence of the central bank.

Waller emphasized that he has spent around 20 years of his career advocating for central bank independence, considering this independence as a key element in maintaining the credibility of monetary policy and economic stability.

Market Implications

Waller's statements reflect a balanced approach within the Fed, combining readiness to continue monetary easing with caution against hasty moves, keeping markets on alert for the interest rate trajectory over the next year.